What Goes Up Stays Up

Why the cost of producing and delivering electricity is going higher

The cost to build new power plants can vary widely. Each type of generation carries a ballpark price tag. The costs shown above, based on each kilowatt-hour produced, take into account plant construction, fuel, operating and maintenance costs, operating performance assumptions, expected operating life, and general tax and financing assumptions. Wind and solar generation are not directly comparable to other technologies because their power production varies based on weather conditions. These costs also do not reflect tax incentives or grid integration costs.

Today it seems like the cost of everything from gasoline to groceries is going up. Unfortunately, the electricity industry is not immune. The cost of producing and delivering your electricity is rising, too.

The core mission of your electric cooperative is to supply reliable, safe and affordable electricity to its members, and to do so at the lowest possible cost. While your cooperative does all it can to manage costs, several issues are directly affecting your electric bill now and will be for years to come. The main drivers of cost increases in our industry are:

Aging infrastructure

New regulations

Changing consumer needs and expectations

Let's take a look at each one, and examine how they are connected to each other.

Aging infrastructure

Your electric cooperative maintains and continually updates its part of "the grid" infrastructure mainly poles, underground and overhead power lines, and the equipment related to delivering electricity. But other parts of the grid mainly transmission systems and generating plants also need to be maintained, modernized or replaced. The cost of upgrading all these systems to meet growing demand for electrical power is going up. In general, building new power plants today costs significantly more than it did in 2000. The relatively recent addition of generating facilities using renewable sources is an important part of this scenario as well.

Increased regulation

Government regulations have tightened air and water standards for generating plants and shortened the timeframe to comply with these new standards. Utilities today must replace or add facilities and equipment on an accelerated schedule, which increases costs. Modernization is necessary not only to meet future demand, but actually to ensure we can continue to maintain a high level of service and reliability today.

Changing consumer needs & expectations

The dizzying array of electronic devices and tools we have today, as well as our growing reliance on high-speed Internet access, has placed a new strain on electricity systems everywhere. Cooperatives are adding new hardware and software on top of basic infrastructure changes to meet the needs of consumer-members.

This all affects you

Your cooperative purchases wholesale power that is generated from power plants fueled from nuclear, coal, hydro, and natural gas resources. To meet the growing requirements, generating facilities are being upgraded and modernized, and the cost of doing that is passed on to consumers.

Because your co-op is a part-owner of the Catawba Nuclear Station in York County, S.C. (operated by Duke Energy), about half of the electricity you use is generated by nuclear power, where costs have remained relatively steady, with zero carbon emissions. Without this nuclear resource, our costs would be significantly higher than they are now.

Additionally, as required by North Carolina law, we are tapping renewable resources like solar and landfill gas. These resources are typically more expensive and are limited in our area. We manage this requirement by purchasing a diverse mix of renewable resources to minimize the cost impact.

Knowing that these rising costs are part of doing business, your cooperative works to minimize increases by managing costs. That work includes implementing cost-saving measures at the co-op and in partnership with our wholesale power providers. Most cooperatives have invested in new technologies and data management software that result in system efficiencies. These investments will provide positive outcomes for both the cooperative and consumer-members over time.

Keep in mind that your cooperative is a non-profit business owned by its members. Unlike other utilities we do not have a guaranteed rate of return. We operate at cost, and if there are any margins over and above our costs in a given year, we return that money in the form of a capital credit to the membership.

The bottom line is that the rising cost of producing and delivering electricity is a fact of life. Because we're all in this together — it's your business, too — we need to work cooperatively to face the facts.

What you can do

Energy efficiency is the best way you can help save yourself energy and money. Your co-op continually offers you advice and help for using energy efficiently to keep down your own costs. Ask your co-op about an energy audit of your home, farm or business facilities; an audit can be a major help in determining where your own usage can be more efficient. Your co-op also knows about financial assistance programs than can help you implement proven energy efficiency improvements that result in real savings.

Your co-op can help you manage how you pay for your power, too, whether it's a pre-pay program, budget billing or by electronic means.

For tips that will help you save energy and money

You can help your cooperative by communicating these concerns to local, state and federal officials. Tell your representatives to help avoid further government-driven increases in energy costs.

Share this article

Leave a comment

You are commenting as guest.

Energy Efficiency Tip

Your kitchen can yield big energy savings. Check the refrigerator door seal for a tight fi t. Run only full dishwasher loads, and use the microwave rather than oven to reheat food and make small meals. Finally, unplug small appliances when not in use—many draw power even when turned off.